Columbus home buyers face confusing marketing when it comes to real estate representation. Think about all the broker websites that proclaim they help both “Buyers and Sellers.” In a nutshell, this points to dual agency in practice, and buyers seldom realize the pitfalls.
Here’s how the New York State Office of General Counsel describes dual agency: “Dual agency arises when a real estate broker or salesperson represents adverse parties (a buyer and seller) in the same transaction.”
Think about the meaning of “adverse parties.” The home seller, and the seller’s agent, have different objectives than you. Namely, they wish to sell the home for as much money as possible, at terms advantageous to the seller. This is an open conflict with your own interests.
With this in mind, why would home buyers accept dual agency representation? Unfortunately, it’s because they don’t realize the disadvantage.
For example, if you see a “for sale” sign in a yard, call the number, and start dealing with the listing agent…you’re falling into the dual agency trap. The agent will ask you to sign an Agency Disclosure Statement. It basically says that you agree to be represented by him, while acknowledging that he also represents the seller.
Dual agency is perfectly legal in Ohio, as long as it’s disclosed, and both parties in the transaction are treated fairly. At least, that’s the idea.
In actuality, dual agency ruins the fiduciary relationship the agent had with the seller, while providing virtually no benefit to the buyer. For example, the Agency Disclosure Statement itself states:
“As a dual agent, a real estate agent and brokerage represent two clients whose interests are, or at times could be, different or adverse. For this reason, the dual agent(s) may not be able to advocate on behalf of the client to the same extent the agent may have if the agent represented only one client.”
In other words, it’s a position of neutrality at best, and therefore useless to you. At worst, despite the disclosure, dual agency presents an inherent conflict of interests.
You can examine how dual agency works in Ohio by reviewing this summary by the Ohio State Bar Association. Here are the highlights:
- A dual agent cannot disclose information that would negatively affect one party’s position, unless authorized by the party, or required by law.
- A dual agent cannot advocate or negotiate on behalf of either client.
- A dual agent cannot suggest specific terms or price.
You might be asking yourself why dual agency is so widely practiced, if it serves so little use to the buyer or the seller! Here’s why: real estate companies don’t like sharing their commission. Dual agency provides a lot of latitude, in return for being able to keep the entire commission in-house. It’s a bargain for the agent; but not a true service to the client.
This “facilitator” style of business is becoming an unfortunate trend, offering practically no value to the consumer. As stated in our April 2012 blog post, client advocacy is the critical difference in real estate services.
Dual agency isn’t the only problem for buyers. Fiduciary duties were changed by the Ohio Legislature in 1996 at the request of the Ohio Association of Realtors. OAR introduced a hybrid called “designated agency” where one firm can represent both sides by having a “designated seller agent” and a “designated buyer agent” working on the same purchase. The kicker is, the head broker is still the “dual agent” yet claims to have the best interests of both sides at heart!
Confused? You’re not alone! This is where the difference between a “designated buyer agent” and an “Exclusive Buyer’s Agent” comes in. Any “buyer agent” who works for a firm that also represents sellers cannot claim to be an Exclusive Buyer Agent.
There are myriad ways in which a conflict of interest can occur in a real estate transaction. Many times, these conflicts are to the detriment of the home buyer. At Buyer’s Resource Realty Services, we perform our fiduciary duty to our buyer clients without compromise. We are passionate about helping Central Ohio home buyers achieve success!
As your Exclusive Buyer’s Broker, we serve your best interests at all times. Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax